Question - Straightforward variance analysis
Andy Enterprises uses a standard costing system. The standard cost sheet for product no. 551 follows.
Direct materials: 4 units @ $6.50 $26.00
Direct labor: 8 hours @ $8.50 68.00
Variable factory overhead: 8 hours @ $7.00 56.00
Fixed factory overhead: 8 hours @ 2.5 20.00
Total standard cost per unit $170.00
The following information pertains to activity for December:
1. Direct materials acquired during the month amounted to 26,350 units at $6.40 per unit. All materials were consumed in operations.
2. Andy incurred an average wage rate of $8.75 for 51,400 hours of activity.
3. Total overhead incurred amounted to $508,400. Budgeted fixed overhead totals $1.8 million and is spread evenly throughout the year.
4. Actual production amounted to 6,500 completed units.
Instructions:
a. Compute Andy's direct material variances.
b. Compute Andy's direct labor variances.
c. Compute Andy's variances for factory overhead.